Do you remember how bad 2002 was in the telecom industry? The bubble had burst, bankruptcies were everywhere and accounting scandals were rampant. Swept up in the disastrous developments plaguing the communications industries was Coudersport, PA-based cable operator Adelphia, led by a kindly grandfather John Rigas and his sons.
In April 2002, Adelphia was hosting its Q1 earnings call when, as almost an aside, one company representative mentioned that the company had loaned the family $3.1 billion in off-balance sheet funds. (I was listening to this call and the alarm bells going off in the participating analysts’ heads were almost audible).
Therein began yet another accounting scandal to rival Worldcom, Tyco and Enron, turning the Rigas family into poster children for perp walks — federal prosecutors alerted the media and arrested the white-haired Rigas paterfamilias and his sons live on camera in an effort to prove the Bush administration was cracking down on white collar crime.
Adelphia fell down like a house of cards, with shocking revelations of self-dealing and greed pushing the company to bankruptcy and ending with the jail sentences of John Rigas and his son Tim, slated to begin on Sunday. Rigas is going to jail for 15 years and Tim will be imprisoned for 20 years.
In a poignant interview with USA Today’s Leslie Cauley, John Rigas, 82, tries to clear his name as he heads to prison, blaming the corporate corruption witch-hunting mood of 2002 for his downfall.
“It was a case of being in the wrong place at the wrong time,” Rigas says. Not quite. Among the revelations uncovered at the time was the fact that Adelphia kept two separate sets of books, one for the public and one for themselves. Other indications of massive financial improprieties emerged too (mickeying with cash flow calculations, inflated subscriber counts and more).
But, it is true that the feds were out for blood and the Rigas family was caught in the panic of that era. It’s also true that supporters, including Adelphia’s accountants, attorneys and cable peers, ran for the hills when trouble kicked in.
What probably isn’t true is that Adelphia or the Rigas family will ever be rehabilitated in the history books, which is why Rigas talked to Cauley. “It may take awhile for the truth to unravel and come out, but I know it will happen,” he says in the article.
Posted by Cynthia Brumfield at 11:53 AM | Print | Comments (0)
Leveraging the last-minute chaotic crush characteristic of any Congress as it races toward recess, the Bush administration pushed through a bill, signed into law already, that expands the scope of its ability to eavesdrop on Americans’ phone conversations or tap into email without a court-ordered warrant. The bill more or less legalizes the scandalous NSA domestic spying program that caused such an uproar in late 2005.
Although it’s hard to say for sure based on the press reports (any maybe that’s because so much surrounding the NSA’s ability to wiretap Americans is conducted in secret, including judicial review via secret courts), it sounds like the bill permits the federal government to wiretap an American citizen if the person is engaged in conversation with someone who is “reasonably believed” to be overseas. No court-ordered warrant is needed for this monitoring, just approval by the attorney general and the director of national intelligence.
That’s the bad news. The good news is that telcos might fight the law because it gives the feds the right to force them to cooperate with this program based solely on the order of Alberto Gonzales and Mike McConnell. Reading between the lines, it sounds as if the telcos, which have been hit with massive lawsuits in the wake of the NSA wiretapping scandal for their cooperation in the spying, fear that only court-ordered warrants will withstand legal appeals.
In other words, this bill, despite legitimizing the NSA program, might not protect the telcos from legal liability even though that was one key reason the legislation was crafted. The telcos think the law is destined to be overturned.
The bill is supposedly slated to sunset in six months, but as the Huffington Post’s David Bromwich points out, weak-willed Democrats are just as unlikely to reverse the wiretapping expansion in six months as they were to have opposed it in the first place. So, if the telecom industry is really unhappy with how the bill turned out, a long-term legal fight between the telcos and the feds may be in the offing.
Posted by Cynthia Brumfield at 9:47 AM | Print | Comments (1)
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